Category Archives: Licensing

IAM Patent 1000 Released – 2014 Edition

Intellectual Asset Management (IAM) magazine has released the IAM Patent 1000:  The World’s Leading Patent  Practitioners 2014.  Each year, IAM surveys its readers and asks them to recommend patent licensing and prosecution attorneys for inclusion in the guide.  According to IAM:

[The IAM Patent 1000 is] a unique guide that identifies the top patent practitioners in key jurisdictions around the globe. . . .
The IAM Patent 1000 has fast become the definitive directory exclusively dedicated to identifying the world’s leading patent services providers. The extensive research process for this guide was conducted over several months by a team of full-time analysts, and involved in excess of 1,500 interviews with patent specialists across the globe.

The IAM Patent 1000 is available on the IAM website to registered users via this link.   I am honored that IAM named me to its lists for both patent licensing and patent prosecution for the fourth consecutive year.  In addition, I am pleased to note that my law firm, Fox Rothschild, is named to the guide’s honor roll for patent prosecution.

Joint ownership of patents can create enforcement risks; here’s how to avoid them

When two or more research institutions, corporations or other entities collaborate on an invention, it is common for them to agree that any patents resulting from the collaboration will be jointly owned. However, a jointly owned patent can be nothing more than a piece of paper if no party has a right to use the patent to stop infringement. The collaboration agreement, patent assignment documents or both must be carefully drafted to ensure that enforcement rights are protected.

This risk was recently highlighted in STC.UNM v. Intel Corp., Fed. Cir., No. 2013-1241, 6/6/14. In the case, STC.UNM attempted to sue Intel for infringement of a patent. The patent was a continuation-in-part of an earlier patent application that was jointly owned by the University of New Mexico (UNM) and Sandia Corp. Because of procedural matters involving a terminal disclaimer, UNM and Sandia also were co-owners of the patent in suit. However, Sandia refused to join the lawsuit, and there was no agreement in place between UNM and Sandia that required Sandia to do so.

The district court dismissed the case for a lack of standing, and the Federal Circuit affirmed.  As the Federal Circuit stated:

“as a matter of substantive patent law, all co-owners must ordinarily consent to join as plaintiffs in an infringement suit”

The reasoning for this ruling was that if only one co-owner sues, it effectively deprives the other co-owner of the right to sue and collect damages for infringement.

Both courts also refused to involuntarily join Sandia to the case as a necessary party.

The case highlights risks that can occur if joint owners of a patent don’t carefully specify enforcement rights — and obligations of both parties — in the relevant agreements.  When collaboration will result in invention, it’s important that the collaboration agreement, assignment agreement, or both specify who has enforcement rights. Even more important, it’s critical that the agreement require the non-enforcing co-owners to participate in the enforcement action when and if needed.

Penn State University to license patents via online auction

Penn State University is primed to launch the country’s first online auction of patent rights resulting from university research. According to a Penn State news release:

About 70 engineering patents in areas as diverse as acoustics, fuel cells and sensors will be available for license in this first auction. Required bid minimums on many will be as low as $5,000.

Available patents are listed on the Penn State Intellectual Property Auction Website. Bidders must pre-register to participate in the action. In addition to single patents with minimum bids as low as $5,000, the auction will include several patent bundles with minimum bids ranging from $10,000 to $50,000. The auction will open March 31, 2104 and close on April 11, 2014.

Winning bidders will need to enter into a license agreement with the University’s Office of Technology Management. The agreement will require the winning bidder to also pay all patent maintenance fees. However, unlike typical university research licenses, no ongoing royalties will be due. Penn State also retains the right to pursue third-party infringers; the licensee can only participate in enforcement if Penn State’s enforcement efforts are not successful after a six month period.

Patent auctions have met with limited success over the years. However, Penn State is tempering expectations with low minimum bids and realistic public statements. Penn State’s news release notes that a key goal of the auction is to “raise awareness among interested parties in business and industry that the University does have licenses available whose commercial applications could prove extremely valuable.”

A small license fee is certainly better than no license fee, especially for patents that are just sitting on the shelf.  In addition, by calling attention to its portfolio of IP in fields such as antenna systems, superconductors, and ground water remediation, the auction will certainly help draw attention to the university’s diverse research capabilities.

Medtronic v. Mirowski Family Ventures: Supreme Court decision affects patent license disputes

A recent Supreme Court decision may prompt patent holders to review license agreements and build in extra protections against actions filed by their licensees. In the case, Medtronic Inv. v. Mirowski Family Ventures, the Court held that a patent holder has the burden of proving infringement in a declaratory judgment action brought by a licensee.

The case was based on an arrangement in which Mirowski Family Ventures held several patents relating to implantable heart stimulators. Medtronic was party to a license agreement with Mirowski, as Medtronic was successor in interest to the original licensee (Eli Lilly). The agreement gave Medtronic a license to produce certain products under the patents in exchange for royalty payments. The agreement also included a procedure for bringing new products under the license. Specifically, if Mirowski notified Medtronic that a new product was infringing any of the patents, Medtronic could either cure the infringement by paying royalties or challenge the infringement by filing a declaratory judgment action.

The dispute arose when Mirowski notified Medtronic that seven new products infringed the Mirowski patents. Medtronic disagreed and brought an action for declaratory judgment of non-infringement. Ordinarily, in any patent infringement dispute, the patent holder bears the burden of proof of infringement. However, the lower court (the Federal Circuit) held that where the dispute is one between a licensor and licensee, the burden of persuasion shifts to the licensee (to prove non-infringement) if the licensee brings a declaratory judgment action.

In its opinion of the appeal from the Federal Circuit decision, the Supreme Court provided a very concise summary of the question and its conclusion:

We now turn to the question presented. A patent licensee paying royalties into an escrow account under a patent licensing agreement seeks a declaratory judgment that some of its products are not covered by or do not infringe the patent, and that it therefore does not owe royalties for those products. In that suit, who bears the burden of proof, or, to be more precise, the burden of persuasion? Must the patentee prove infringement or must the licensee prove noninfringement? In our view, the burden of persuasion is with the patentee, just as it would be had the patentee brought an infringement suit.

Thus, in a unanimous opinion, the Court reversed the decision of the Federal Circuit.

An implication of the decision is that patent licensors should be cautious when accusing licensees of patent infringement, whether the accusation is based on non-payment of royalties or on the sale of non-licensed products. Accusations of infringement could result in a declaratory judgment action by the licensee. If the declaratory judgment action involves only the patents and not the license agreement, the licensee may be able to select the venue for the declaratory judgment action.

Because of this, patent holders may wish to consider certain changes to their typical license agreements.  For example, if a choice of venue clause refers only to disputes under the agreement, disputes regarding unlicensed products could be considered to fall outside of the agreement. So, a patent holder may consider bringing any disputes relating to the licensed patents into the choice of venue clause.  This could limit the locations in which the licensee can bring a declaratory judgment action, and perhaps make it more inconvenient for the licensee to do so.

However, the extent to which a patent holder can place other limits on declaratory judgment actions is not as clear. For example, the licensor could include a clause that permits termination of the license agreement if the licensee brings a declaratory judgment action. Whether such a clause will be upheld on public policy grounds has been questioned by a number of commentators after cases such as MedImmune v. Genentech.  Until such clauses are definitively upheld or struck down many patent holders are including such clauses to provide an extra degree of protection in licensing arrangements.

Licensing tips: which entity is the licensee?

When licensing a patent, software or other intellectual property, it’s critical for the licensee to ensure that the license covers all entities who will use the IP.  This may include the licensee’s parent company, subsidiaries, other affiliates, customers or other entities.

The license grant clause, along with the definitions of “licensee” and (if included in the license) “affiliate” will typically govern the entities who may take advantage of a license. Unless the agreement specifically calls out an entity, that entity may not be able to take advantage of the license, whether as a licensee or (depending on the nature of IP involved) as a sublicensee.

A recent court decision from the Central District of California illustrates how the definitions will typically control the scope of a license. In the case, nQueue Inc. v. Control Systems (USA) Inc., nQueue filed a patent infringement suit against Control Systems. In defense, Control Systems argued that it was covered by a license that nQueue granted to Control Systems’ ultimate parent company, Equitrac Corporation. Continue reading

Shop Rights: What are they and can they be assigned?

“Shop rights” arise when an employee uses an employer’s resources to create an invention, but the employer does not own the invention. A shop right permits the employer to use a patented invention for its own business as a quid pro quo when the inventor used the employer’s resources to develop the invention.

The concept of a shop right is not found in any law.  Instead, it is a judicial creation that grew out of equitable principles. Because of this, shop rights are fact-specific. When determining whether a shop right exists in a particular situation, a court will consider several factors to determine whether equity and fairness should entitle the employer to use the invention without paying a royalty.  These factors include Continue reading

Let’s Keep it a Secret

On June 6, 2013, I had the opportunity to attend a spirited panel discussion about trade secrets.  The session, titled “Let’s Keep it a Secret:  Protecting, Valuing and Licensing Trade Secrets,” was hosted by the New York City Chapter of the Licensing Executives Society and Fox Rothschild LLP.  The panel and audience of licensing professionals debated issues ranging from “why treat trade secrets differently from any other confidential information,” to “how can you make money licensing trade secrets?”

Moderated by patent and licensing attorney Janet MacLeod, Ph.D  of Fox Rothschild, the panelists included:

Moderator Janet MacLeod started the discussion by asking whether the recent media and court attacks on software patents and gene patents could make trade secrets even more valuable.  With the panelists generally agreeing that the answer was “yes,”, tips from the panelists included: Continue reading